Under the Hospitality Hood
Thoughts & Musings
The difference between sales bonus plans that benefit the salespeople and those that benefit ownership can be dramatic. Shockingly, many hotels have plans that pay significant dollars to salespeople while the hotel may be missing its budget by millions of dollars. The challenge, and the opportunity, is to come up with a plan that sufficiently motivates salespeople to achieve maximum productivity, while absolutely connecting them to the overall financial performance of the asset.
Without strategic planning, it is difficult if not impossible to maintain or improve performance, regardless of market circumstances. One’s ability to execute against such strategic plans is truly “where the rubber meets the road.” In today’s hospitality environment, there is no shortage of well-intentioned plans, ideas, and initiatives all aimed at growing market share and profit. There is, however, a shortage of well-executed and implemented plans.
While the successes of recent years have led (finally!) to an ebbing in the growth of supply, the reality is that most markets in the US will have to absorb additional inventory growth in 2016. Nonetheless, our history is at least consistent; results improve, supply grows, new rooms are absorbed, improvement levels off, the cycle moves downward, and so it goes. We aren’t on the downward side just yet, but a harsh reality for all of us is the fact that, for 2016 and beyond, real success is going to come only to those who are strategic and proactive enough to seek out and implement new ways to do business.
With competition continuing to increase almost everywhere, the importance of distinguishing our hotel properties from their competitors is more important than ever. We can accomplish this through a variety of means; flag/affiliation, loyalty programs, advertising, marketing, special promotions, price, etc., etc. While all of these represent legitimate branding tactics, they do not address what can be the most obvious benefit from a true branding strategy...
The hospitality industry as a whole generally views the concept of OTA’s as stealing our hard-earned business and then charging us a higher margin or commission in order to receive that business. Rather than sitting back and resting on our laurels,the challenge to our industry is clear; OTA’s are here to stay and are a major force; our opportunity lies in how we reinvent ourselves to capture more of this business when we need it most.
While this week’s news of Marriott’s purchase of Starwood caught many industry experts by surprise, focus has quickly shifted to the question of “what does it mean to me?” Owners are asking this question, of course, and more & more customers are doing the same. While of course we will all have to wait and see, here we will weigh some of the positives and negatives.
Conventional wisdom dictates that in the world of Sales, higher numbers reflect better performance. To a certain extent, this is irrefutable; the more revenue a salesperson generates, the better the performance of the hotel. Tough to argue with this logic, correct? Reality tells us, however, that this is not always the case.
At the moment, business is good nearly everywhere, but many in the industry are quietly wondering when “the other shoe will drop,” and when the current profitability cycle will officially come to an end. Despite all of this, the downturn is coming, it’s just a question of when. Knowing this, are you spending your time (and money!) wisely on renovation/product enhancement opportunities now before the bubble bursts?
In so many instances, consumers are asked to bear the brunt of strategic decisions made by brands despite the obvious flaws in these decisions. It’s no secret that the hotel industry is no different. We have openly adopted an approach that involves imposing various fees on our customers in an attempt to recover revenue and profit that may have deteriorated for a variety of reasons. Some of these reasons include increased competition, downward trends in market performance, etc. And while no one can deny the math, (reflecting huge fee revenues being earned), what seems to have been completely forgotten in this equation is the customer’s expectation of value.
It’s the nature of hotel sales organizations that much discussion and strategic planning is held around the subject of how to increase business levels. This effort is essential; how to find new sources of business, how to grow existing accounts, these are things that are crucial to the increased revenue performance and profitability of your assets. While you may have a reasonably high degree of confidence that this is already taking place, do you have the same level of trust that your sales organization is equally focused on stealing business?
